2009 Mazda 3 sedan to debut at Los Angeles Motor Show

Taking a number of design cues from the recently announced 2009 Mazda 6 , the next generation of the popular Mazda 3 compact sedan will debut at the Los Angeles Motor Show in November.

The four-door hatchback version will premiere at the Bologna Motor Show a month later.

For the US market, the current range of 2.0 and 2.3 liter inline-four gasoline engines will carry over to the new car unchanged. The car will go on sale in Europe at the start of 2009 and will be available in the US by mid-summer or early fall.

Despite the pressure of rising gas prices, Mazda announced that it will offer a high performance MazdaSpeed version. Expected to be hit the streets in 2010, the new MazdaSpeed 3 will likely use a version of the 2.5 liter turbocharged inline-five currently available in the US market Volvo C30.

Photo Credit: AutoExpress.co.uk
Source: Autocar, AutoExpress

Torque junkies rejoice: BMW 335d will come to US shores next year

A while back, we posted a teaser vid of BMW's forthcoming 335d sedan.
Now that early fuel economy stats are coming for the US version, the new oil burner is making a compelling case for itself.

The direct-injected, twin-turbo diesel inline-six will produce 265 horsepower and a leviathan 435 pound feet of torque — all while averaging 23 mpg in the city and 33 on the highway. In other words, the 335d will offer a 30 percent increase in fuel economy compared to the 335i, its 300 horsepower, 300 pound-foot gas-powered stable mate.

An excerpt from the official press release follows:

The new 335d Sedan: power, torque and remarkable fuel efficiency. All with refinement and sound worthy of a BMW.

In Europe, where fuel prices have historically been - and remain - much higher than in the U.S., vehicle manufacturers have achieved dramatic gains in the performance, smoothness, quietness and emission control of diesel engines...while maintaining the diesel's historic superiority in fuel efficiency. Now, with the new 335d Sedan, BMW brings this progress to the U.S., with brand-new technology that meets the U.S.' strictest emission standards.

Like all '09 BMW gasoline engines, the 335d's new diesel is constructed with a weight-saving aluminum cylinder block - something that's not taken for granted given the diesel's much higher compression pressures. (All BMW engines have aluminum cylinder heads.) It is an inline 6-cylinder engine maintaining a defining BMW tradition that means exceptional smoothness and unique sound.

In addition, several diesel-specific technologies of this new engine contribute to its achievement of true high performance, diesel fuel economy and clean exhaust:

Common-rail direct fuel injection. One of the most important innovations of recent diesel development, this has replaced the individual-cylinder or distributor-type injection systems of earlier diesel engines.

Common Rail (CR) means that a single, very high-pressure fuel-delivery pump supplies all cylinders, the fuel traveling along a common "rail" or distributor line. From there, fuel is injected at extremely high pressure (180 bar/2645 lb./sq in.) directly into the cylinder.

The basic novelty of common-rail injection was to divorce the production of fuel pressure from the actual injection process; this was necessary to give the diesel engine what gasoline engines have long had, namely completely electronically controlled fuel injection. CR also facilitates multiple injections per combustion cycle. In all, this was a breakthrough that made possible dramatic strides in diesel power, efficiency and emission control.

Piezo injectors. A further breakthrough, already applied by BMW in the 335i (and other BMWs) models' twin-turbo gasoline engines. With direct injection, the injectors - that critical component injecting fuel into each cylinder's combustion chamber - are subject to especially high temperatures and pressures. Instead of most injectors' conventional electrical valves, a "stack" of piezo crystals reacts lighting-fast to impulses from the engine electronics governing the injector needle's opening stroke and duration for ultra-precise control. This, too, facilitates major advances in fuel economy and emission control, in gasoline, as well as diesel engines.

Variable Twin Turbo technology. In contrast to the two small, equal-size turbochargers of BMW's twin-turbo 6-cylinder and V-8 engines, the diesel employs two turbos of different sizes.

At low engine speeds, intake air does pass through the large turbo, but it's the smaller, lower-inertia one that does the air compressing (turbocharging). Thanks to its optimum efficiency within this rpm range, it provides effective boost for driving from a standstill up to modest acceleration rates and driving speeds. So it is that this engine develops a good 390 lb-ft. of torque at as low as 1500 rpm - a remarkable achievement that will amaze first-time 335d drivers and continue to thrill those who drive this BMW regularly.

With increasing engine speed, the larger turbocharger begins to take over: first as a pre-compressor for the smaller one, then progressively until it becomes the primary turbo. The engine reaches its maximum of 425 lb-ft. by 1750 rpm, then maintains this immense torque level until 2250 rpm going on to reach its peak power of 265 hp at 4200 rpm.

Diesel combustion, power and torque characteristics. In its most basic distinction from gasoline engines, a diesel engine achieves its combustion not with a sparkplug, but by much "harder" compression of the fuel-air mixture; the 335d engine, for example, has a compression ratio of 16:5:1, vs. 12.0:1 in today's ultra-high-performance BMW M gasoline engines and the 10.2:1 of the 335i twin-turbo gasoline unit. For one thing, this requires a significantly stronger engine structure; indeed, the 335d engine weighs more than its 335i counterpart.

The diesel combustion process also produces very different torque and power characteristics. Whereas the 335i engine reaches a maximum torque of 300 lb-ft. @ 1400-5000 rpm and a maximum power of 300 hp @ 5800 rpm, the 335d attains its maximum torque of 425 lb-ft. @ 1750-2250 rpm and its maximum power of 265 hp @ just 4200 rpm. In general, diesels have this low-speed-torque, lower-rpm character and in their vehicular application, they are geared differently. The 335d, for example, comes only with automatic transmission - an automatic is the ideal partner for a diesel engine - and its final drive ratio is 2.81:1, vs. 3.46:1 for the 335i with automatic transmission.

Diesel engines also employ a different fuel, the product of a different refining process from that of gasoline. The two fuels are not interchangeable; gasoline cannot be used in a diesel engine, and vice versa. Their prices typically diverge; at any time or in any location, demand may be different for the two, and government taxation policies for gasoline and diesel fuel also diverge.

Stellar pulling moxie, full-bore acceleration - and fuel efficiency. The huge torque output of 425 lb-ft. at relatively low engine speeds speaks for itself; 335d drivers will marvel at this engine's robust response at low to medium speeds. The peak power output of 265 hp also speaks for itself, as does the resulting 0-60-mph time of 6.0 sec. While official EPA mileage estimates are not yet available, preliminary tests indicate 23 mpg city and 33 highway.

Most advanced exhaust gas management: SCR catalyst with AdBlue injection.

BMW Advanced Diesel with BluePerformance optimizes emission management by incorporating an oxidation catalyst placed close to the engine, a diesel particulate filter housed in the same unit, and an SCR catalyst with urea injection. Apart from filtering out even the smallest particles from the flow of exhaust gases, this combination ensures effective reduction of nitric oxides (NOX) by way of a chemical reaction within the exhaust system initiated by the injection of a small dose of urea referred to as AdBlue. The ammonia (NH3) generated in this process within the SCR catalyst subsequently converts the nitric oxides (NO and, respectively, NO2) in the exhaust gas into environmentally compatible nitrogen (N2) and vapor (H2O).

BMW has developed a two-tank system for AdBlue ensuring convenient use of this new technology with all the benefits and ease required by the customer: The amount of AdBlue required in each case is drawn from the active tank comprising approximately 1.6 gallons by means of a dosage pump. And since the urea solution would freeze at a temperature of oC, this active tank, as well as the dosage pipes are heated.

AdBlue technology by BMW: reduced emissions without additional service appointments.

The active tank is connected to a second reservoir, the so-called passive tank. With its additional capacity of approximately 4.5 gallons, this passive tank offers a plentiful supply of the urea solution required within the car. The average range provided on this supply capacity is indeed sufficient to have the tank system replenished as part of normal scheduled maintenance.

From the active tank AdBlue is delivered to the dosing valve and atomized into the exhaust emissions. Consistent distribution of AdBlue within the flow of exhaust emissions is ensured by the SCR mixer. The ammonia generated in this way in the hot emission gas subsequently acts in the SCR catalyst as a reduction agent and converts environmentally harmful nitric oxides into nitrogen and water vapor in a process referred to as selective catalytic reduction.

This process gives the special SCR catalyst its name with the SCR system as such being masterminded by highly efficient engine management. A nitric oxide sensor, finally, provides information on the concentration of NOX in the exhaust emissions.

The large amount of AdBlue provided in the reservoir enables the customer to go on driving as before without having to change service intervals or observe any particular requirements, thus benefiting from the advantages of this environmentally friendly emission technology throughout the entire running life of the car without any additional service or visits to the workshop. During the first four years or 50,000 miles, the replenishment of AdBlue will be covered as part of the BMW Scheduled Maintenance program: not only will there be no additional inconvenience, but no additional cost during that period.

Chase terminates Chrysler leasing program; GMAC rates rise for high-risk borrowers

Unwilling to get stuck with a glut of depreciated and difficult to sell lease returns, Chase Auto Finance announced today that they will no longer finance leases for Chrysler vehicles. This news comes on the heels of Friday's announcement that Chrysler's own financing arm will exit the leasing business on August 1st.

In the announcement, Chase cited concerns about the residual value of Chrysler's current products. Since lease payments are calculated based on the anticipated residual value, any further depreciation beyond what is factored into the lease agreement would become the lender's liability.

[Source]

GMAC revises lending guidelines; finance rates to rise for high-risk borrowers

In other news, General Motors' financing company GMAC has rewritten their lending policies, placing new restrictions on high-risk borrowers with poor credit ratings.

The move is part of an ongoing process to curtail loan delinquencies.

"In general terms, GMAC is not a subprime credit company," said spokeswoman Sue Mallino in an interview with Automotive News Daily. "About 80 percent to 90 percent of our credit is in the prime arena for auto financing in the U.S."

Mallino denied a report that the company would halting all leases to high risk borrowers. Instead, GMAC will ask borrowers with poor credit scores to produce a larger down payment or in some cases, move to less expensive vehicles in the GM lineup.

[Source]

Kia has got Soul... and it's headed our way

Since their arrival in the US 14 years ago, Korean automaker KIA Motors has been been playing it safe. But building cars for niches where they can compete on price leads to bland, mediocre cars... ones that work best when thought of only as an appliance. Like a toaster or a dishwasher.

To break out of the ranks of toaster-car makers, KIA needed to find some soul. Starting next spring, they'll have it in spades.

Aimed straight at the early 20-somethings not yet won over Scion brand, the Soul is a four door hatchback with coke-bottle flares and a wraparound windscreen.

At first glance, the Soul bears more than a passing resemblance to the current Scion xB. Arguably, it was KIA who first set the mold for a butch looking, car-based trucklet. At the Detroit Motor Show in 2006, design chief Peter Schreyer unveiled the Soul in prototype form. Two years later, a trio of fully operational concepts came to the Geneva Motor Show. (See below for a full gallery).

In addition to adding some visual flair to the brand, the Soul will also compete on price and fuel economy. While the xB is powered by a 158 horsepower 2.4 liter inline-four, the smaller, lighter Soul will be powered by the company's 1.6 and 2.0 liter inline fours, rated at 110 and 138 horsepower, respectively.

In an era of heavy traffic and high gas prices, KIA is banking that gas mileage will appeal more than raw horsepower to the Soul's frugal yet style-conscious buyers.

Pricing has not been finalized, but given the xB's MSRP of $16,420, expect the Soul to be priced near $14,000.

[Link]

Gallery:

VIDEO: Ford Verve Concept

While the Verve debuted at the Detroit Motor Show nearly six months ago, this week's restructuring announcement provides an opportunity to delve deeper into what Ford will bring to market for the embattled Mercury brand.

Follow this link for more photos and details on the Verve.

VW to build fuel-miser "1 Liter" concept

As NMM continues to grow, I've focused on breaking news and new technologies. But to fully understand the impact of VW's decision, I have to delve in the company's history for a moment.

In 2002 — shortly after then CEO Ferdinand Piech presided over the launch of the $70,000-plus VW Phaeton luxury sedan — Piech wanted to attend the company annual meeting in Hamburg in style.

But rather than pluck one of the hand crafted Phaetons off the line, Piech directed a small group of engineers to build the most fuel-efficient vehicle they could. The result set the European motoring press raving.


Follow this link for full-size photos and to learn more about the VW "1 liter "concept.

Weighing only 638 pounds and hewn from unpainted carbon fiber, Piech's 2-seat fuel miser returned an astounding fuel economy of 0.9 liters of diesel per 100 kilometers.

Fiddle with the figures a bit and you get 282 miles per imperial gallon.

Now, the "1 Liter" concept car will be put into limited production.

While the concept car's 356cc single cylinder will be replaced by a turbodiesel inline-twin , the design remains otherwise unaltered. The passenger still sits behind the driver to minimize the width of the car. And to preserve the strength of the carbon-fiber monocoque body, the jet-fighter canopy door will also carry over to the production model.

The asking price is still up in the air. The carbon fiber chassis will be the most expensive investment for VW, but the company is optimistic that the car will hit the road in 2012 for about £24,000.

VW hasn't spoken about whether the car will come to US shores, but they haven't ruled it out either. They haven't capped the number of units either. In other words, start calling and writing now.

[Source]

Ford announces revamped lineup, reports $8.7 billion loss in second quarter of 2008

In their quarterly earnings report, Ford announced today that its operations lost $1.3 billion in rising production costs during the second quarter. While sales produced $258 million, over $8 billion in losses and devalued assets produced a flood of red ink.

All told, Ford lost $8.7 billion for the second quarter of 2008, making this the worst quarter in the company's history.

Yesterday, we reported that the Mercury brand will be infused with a large percentage of vehicles drawn from Ford's European offerings. Following the grim financial news this morning, Ford released new details on the company's revamped product line.

• Michigan, Kentucky and Mexico plants to retooled:
Beginning in December, the company will retool the Wayne, Michigan plant to build a new sedan bred from the European Focus platform. Production of the Ford Expedition and Lincoln Navigator - rumored earlier to be on the chopping block - will be moved to the Fayetteville, Kentucky plant early next year.

In 2011, the Louisville, Kentucky plant will retool from Ford Explorer production to more intermediate and compact sedans.

The third plant — which went unnamed in yesterday's report — to shift to car production will be in Cuautitlan, Mexico. The plant currently builds the F-series pickup, will build the new Ford Fiesta hatch in early 2010.

Bucking the trend, the Ford Ranger compact pickup has received a stay of execution. Previously, Ford announced that production would end in 2009; the company announced today that the Minnesota plant which builds the Ranger will continue production through 2011.

• New product plan to eliminate redundant platforms:
As reported by Automotive News Daily, Ford confirmed the following products in development:

2009:
• Ford will introduce a version of the European Transit Connect small van.
• Lincoln will receive a seven-passenger crossover, likely to be based on the Mazda CX-9 crossover.

2010:
• The European Ford Fiesta will debut in sedan and five-door hatchback versions. The Mercury division will receive their own as-yet unnamed model based on the new Fiesta.
• The US Ford Focus will switch to the European market platform in sedan and five-door hatchback models.

Late 2010, 2011:
• A uni-body version of the next-generation Ford Explorer will arrive. In addition to new drivetrain and
significant weight reduction, the new model will improve fuel economy by as much as 25 percent.

In addition to the new platforms, Ford announced it will accelerate development of its EcoBoost engines, which will replace the venerable "modular" V8 engine range with a series of smaller displacement, turbocharged and direct injected V6 mills.

• Hourly worker buyouts to continue:
In addition to the overhauled product range, Ford said it would continue to offer targeted buyout plans to hourly workers at its US plants. The company said it is on track to reduce their salaried worker costs by 15 percent — most of which will come through attrition — in the US by August 1st.

Trading on today's news weighed heavily on Ford; company stock fell by 15.3 percent to close today at $5.11 per share.

[Link]

Fleet-footed once more, Mercury will lead Ford's transition with new cars from European market

It is no secret that the auto industry has been hit hard by the double whammy of high gas prices and soaring inflation. Amidst this bad news, Ford's Mercury division appeared to be wilting much the same way that Chrysler's Plymouth brand did a decade earlier.

The lack of investment in new vehicles was readily apparent by 2007. While Ford CEO Alan Mulally insisted last fall that Mercury was not circling the drain, news leaked that suppliers had stopped renewing their contracts and that no new vehicles had been planned beyond 2012.

At the time, Ford had just sold Jaguar and Land Rover to Indian automaker Tata Motors for $2 billion, barely breaking even on their investment to rescue the iconic British marques from the clutches of then ailing British Leyland.

In poker parlance, the fire sale of Jaguar and Land Rover was a tell. A desperate move amidst a tidal wave of red ink.

But it appears that rumors of Mercury's death were greatly exaggerated.

The New York Times has reported that Ford will revitalize the Mercury brand with an entirely new model range, drawn increasingly from Ford's European offerings. An official announcement is expected tomorrow morning as the automaker releases their quarterly earnings report.

The move is similar to General Motors' strategy to redefine the Saturn division as the US line for their European models. The strategy has paid off so far; as sales of trucks and SUVs have flat-lined, demand has risen for smaller cars. The Saturn Astra - itself a rebadged Opel Astra from GM's European division - has been selling a pace the outgoing ION sedan could never match.

As a part of the shift in product strategy, Ford is expected to make permanent cuts in truck and SUV production. According to the New York Times report, three plants will be retooled for car production -- the Wayne, Michigan plant (which builds the Ford Expedition and Lincoln Navigator) and the Louisville, Kentucky plant (which builds the F-250 and F-350 pickups).

The location of third plant chosen for retooling has not yet been released. Besides Kentucky, Ford builds trucks and SUVs in Dearborn, Michigan, Kansas City, Missouri and Cuautitlan, Mexico.

[Link]

VIDEO: Reconsidering the MPG benchmark

Miles per gallon. In the US, it is the ubiquitous standard of fuel economy.
Expressed in the most literal terms possible, there shouldn't be any confusion.

And yet there is.

When it comes to making purchasing decisions that affect how much gasoline we use per capita, it can lead buyers to make false assumptions.

Which will save more gasoline: swapping a 10 mpg truck for a 20 mpg model?
Or trading a 25 mpg car for one that gets 50?

A pair of Duke University business statisticians cast a critical eye on the MPG benchmark and came up with some interesting conclusions. Check out the video below:



Viewed in real-world terms, the study makes a convincing case for using hybrid technology in heavy commercial vehicles. FedEx and UPS already employ small fleets of hybrid delivery trucks and plan to integrate more of them into their fleet.

In the long term, 50 miles per gallon is an admirable and achievable goal for our commuter cars. But any net fuel savings remains a goal worth pursuing, even when it comes from unlikely sources.

2009 Chevrolet Equinox to receive all-new drivetrains, Pontiac Torrent SUV culled

In the wake of the restructuring plan announced last week, we are learning more about the sweeping changes coming to all corners of the GM empire. With fuel economy triage being the top priority, the General is tending to the patients in worst shape first.

For 2009, the Chevrolet Equinox SUV will ditch its 3.4 liter pushrod V6 for an all-new 2.3 liter turbo inline 4 with direct injection. The motor is a stroked version of the 2.0 liter turbo four found in the Chevrolet Cobalt SS.

Official horsepower figures haven't been released yet. Given that the current V6 is rated at 185 horsepower, we expect output in the mid 200s. Fuel economy figures aren't in either, yet a 15 percent improvement from the current model's mileage (16 city / 24 highway) isn't out of the question.

In addition to the base four cylinder, a Sport model will join the lineup in mid-2009, powered by a 263 horsepower DOHC 3.6 liter V6 taken from the Saturn Aura.

Both trims will be front wheel drive using the same six-speed automatic transmission with manual shift control.

The Pontiac Torrent — a badge-engineered clone of the current Equinox model — will cease production at the end of 2008. The new Equinox will be re-badged by the GMC division and sold as the GMC Terrain, starting mid-2009.

[Source: GM]

VIDEO: 2009 BMW 3 Series sedan facelift

Announced to the media last week, BMW has released driving footage of the newly freshened 3 Series sedan model range. Mechanically, the 328i and 335i soldier on unchanged, to be joined by the 335d sedan later in the year.

Next week, we'll reveal more details on the 335d. Stay tuned.

Something wicked this way comes: Nelson Racing builds 1600+hp Mosler MT900

With 550 horsepower, a stock Mosler MT900S is already a titanically fast machine. A street-legal descendant of the MT900 racer, the svelte LS7 V-8 powered missile demolishes the quarter mile in 12 seconds flat on the way to a top speed well over 180 miles per hour.

Yet Mike Vietro, owner of the only Mosler dealer in the US, saw room for improvement.

Seeking help from Nelson Racing Engines of Chatsworth, California, Vietro delivered his scarlet and white "Red Devil" MT900S, seeking a power plant befitting the name.

This week, proof that NRE delivers the goods came in spades.
1,635 horsepower and 1,481 pound feet of torque at 5600 rpm, to be specific.

During the engine dyno test, the twin-turbo LS7's output continued to soar by about 70 hp per 100 rpm (see the dyno sheet below). Yet with oil pressure and temperature holding steady, the test was shut down at Vietro's request.

“Fulfilling this unique request was not an easy task. We spent months perfecting this engine,” said Tom Nelson, owner of Nelson Racing Engines. “Ultimately all our hard work paid off and once completed this Mosler will be a one of a kind vehicle, unmatched in power and performance.”

Final tuning and installation are nearly complete. The final tunes includes a 91 octane tune good for 1,150 horsepower at 13 pounds of boost pressure. Dump in the C16, however, and up to 1800 horsepower will be available at the touch of a button.

Stay tuned; as the road test figures come in, expect records to fall.
Vietro's Mosler certainly has the output to decimate all challengers.


[Source: Nelson Racing Engines]

Däs boost: All Mercedes cars to be turbocharged by 2010

For those of you who still mourn the passing of the C32 AMG and its silken supercharged six, take solace.

Within the next 30 months, Mercedes-Benz will roll out a series of smaller displacement turbocharged engines to improve gas mileage without sacrificing performance.

Emissions compliance is also a factor in the decision to choose forced induction over big displacement. The EU will begin to fine automakers whose fleet CO2 output exceeds 178 grams per km starting in 2012. Without resorting to smaller, force-fed engines, the fleet will not comply with the new law.

A similar emissions law is under consideration in the US Congress.
Incidentally, the S-class übersedan will be offered with a full hybrid drivetrain by 2009.

In the announcement, Daimler board member and R&D chief Thomas Weber also said that a zero-emission production vehicle is among the auto maker's long-term goals. In addition to electric vehicles, hydrogen fuel cells are also being considered for future Benzes.

A full-electric version of the ForTwo from Mercedes sister brand Smart will go into production in 2010.

GM dealer council buys $1 million in stock

Dealers from GM's national dealer council put their money where their mouths are this week, purchasing more than $1 million in GM stock.

GM has been battered on the NYSE in recent months and recently took a sharp blow to its stock prices, trading below $9 per share last week. Yet the council of dealers remain committed to the company's future with both their words and wallets.

"We took a hard look at General Motors and we wanted to show our confidence in General Motors," says Duane Paddock, co-chair of GM's national dealer council and owner of Paddock Chevrolet in Kenmore, N.Y.

The purchase was completed on July 14, buying 107,000 shares for a total of $1,057,000.

Their timing could not have been better. GM stock rose 16.6 percent two days later. Today, shares surged another 11.9 percent closing at $12.85.

The council will be sending a letter to dealers this week explaining the move in greater detail, Paddock said. "We want them to know the confidence their dealer council -- as a group -- has in GM and to let them know that it's a great investment for other dealers."

The council is also considering purchasing airtime to share their message of confidence with consumers. "We firmly believe in GM and that we have the best products to sell, our fuel economy is the best story in the industry and the best way to do it was to buy an investment stock," said Paddock.

[Link]

All-new Mazda6 to hit showrooms in August

With the smaller Mazda3 flying out of showroom this year, the mid-size Mazda6 has become the wallflower of the brand.

Despite the shift to smaller sedans this year, Jim O'Sullivan, CEO of Mazda North American Operations, says the new Mazda6 is "the most important new vehicle Mazda has launched in a decade."

Mazda will price the four-cylinder version of the 2009 Mazda6 at $19,220; the V-6 version will start at $24,800. Both prices include shipping.

The new model will be available to dealers in August, the automaker said.

"Bringing any new car to market at a competitive price has always been critical, but seldom more so than today," CEO Jim O'Sullivan said in a statement. "Customers are looking for that rare combination of style, dynamics, economy and a great price, and the all-new 2009 Mazda6 delivers on all levels."

[Link]

VW to build new US plant in Tennessee

In keeping with their goal to rival Toyota's global sales, Volkswagen AG will invest US$1 billion in a new factory to be built in Chattanooga, Tennessee.

When opened in 2011, the factory will employ 2,000 workers. Production will begin with a new mid-sized sedan designed specifically for North America. In addition to expanding production capacity, the new factory will help insulate the company against the adverse effects of a weakening US dollar and fluctuating exchange rates.

Last year, the VW/ Audi Group sold over 324,000 units, roughly 230,000 of which were Volkswagens. The company plans to increase it's US sales to 1 million units by 2018, with 80 percent of that volume coming from the Volkswagen brand.

"The U.S. market is an important part of our volume strategy, and we are now very resolutely accessing that market," said VW group CEO Martin Winterkorn. Winterkorn went on to note that Chattanooga was chosen because of its supplier infrastructure, qualified workforce and transport connections.

The news ends speculation that Volkswagen had planned to build the new factory in Alabama. Rumors also circulated that Michigan was an alternate candidate.

VW, Europe's largest carmaker, closed their last U.S. production facility, located near Pittsburgh, Pennsylvania in 1988.

[Link]

Market Watch: GM, Ford shares rise as oil prices slide

After enduring months of unending decline, shares of General Motors and Ford Motor Company closed up by more than 15 percent as oil fell by over US$10 per barrel in the past 48 hours.

Oil prices declined on news of higher domestic inventories of crude oil and gasoline from the US Department of Energy. Prior reports indicated that inventories would continue to decline over the summer.

The recovery of GM's share price comes a day after CEO Rick Wagoner's restructuring plan aimed at raising US$15 billion in capital to survive what the company expects to be their worst sales year in a decade.

Further bucking the bear market, today's gains came despite credit rating agencies downgrading or threatening to lower their ratings for each automaker.

Moody's Investors Service announced it would review its ratings on Ford, while Fitch Ratings on Tuesday downgraded GM to B-minus from B.

Both agencies cited a gloomy forecast for automakers in an already slow sales year.

The following suppliers and dealership groups also posted gains in afternoon trading today:

Dealership groups:

• AutoNation Inc.: $8.00, up 5.6 percent

• Penske Automotive Group Inc.: $12.50, up 5.8 percent

• Sonic Automotive Inc.: $8.89, up 5.9 percent

• Group 1 Automotive Inc.: $16.19, up 7.3 percent

Suppliers:

• Johnson Controls Inc.: $29.61, up 4.0 percent

• Lear Corp.: $14.97, up 7.7 percent

• Dana Holding Corp.: $6.56, up 7.5 percent

GM braces for the storm: jobs, output, dividends and bonuses slashed

Reacting to stagnant sales and record low share prices, General Motors CEO Rick Wagoner said it will improve its balance sheets by cutting production of its slow selling models, laying off salaried employees, suspending its shareholder dividends and borrowing at least US$2 billion to cushion the operation against a prolonged slowdown in domestic sales.

"We are responding aggressively to the challenges of today's U.S. auto market," Wagoner said in a statement. "We will continue to take the steps necessary to align our business structure with the lower vehicle sales volumes and shifts in sales mix. We remain committed to bringing to market great products that target changing consumer preferences for more fuel-efficient vehicles."

"Today's actions, combined with those of the past several years, position us not only to survive this tough period in the U.S., but to come out of it as a lean, strong and successful company," Wagoner said.

Today's announcement ended rumors that the world's largest automaker would file for bankruptcy later this year. Any enthusiasm was muted however, by the news of drastic changes to the company's work force and employee benefits.

Wages frozen, retiree benefits slashed

In addition to an unspecified number of layoffs, GM said it will eliminate health care coverage for US salaried retirees over 65, effective January 1, 2009. Raises for salaried employees in the US and Canada will be deferred through 2009.

Executives will also be doing their share of belt tightening and instead "will have a significant reduction in their cash compensation" this year and will receive no cash bonuses in 2008. The move will result in a 75 to 84 percent reduction in executives' cash compensation opportunity, GM said.

GM will also defer $1.7 billion in payments to its union-led health care benefit trust for hourly retirees. Originally scheduled for this year and next, the fund was a key part of the 2007 contract between GM and the UAW.

More cuts in truck production

On the production side of the operation, GM said it will accelerate their previously announced cuts.

Last month, the automaker said it would cease production at three North American truck plants in 2009 or 2010. Those plants were the Oshawa, Ontario, truck assembly plant to close in 2009; the Moraine, Ohio, truck plant in 2010; and the truck line in its Janesville, Wis., plant by 2010.

The Oshawa plant builds the GMC Sierra and Chevrolet Silverado pickups. The Moraine plant builds the Chevrolet Trailblazer, GMC Envoy and Saab 9-7X. The Janesville truck line makes the Chevrolet Tahoe, Chevrolet Suburban and GMC Yukon SUVs.

In total, GM expects to reduce output by 300,000 units by year's end, saving US$2.5 billion in the process.

"The actions announced today are difficult decisions, but necessary to respond to the current auto market conditions," Wagoner said in the statement.

Increased borrowing, focus shifts to fuel efficiency

In addition to cutting costs across the board, GM said it will raise US$4 billion to US$7 billion in additional funds through financing or asset sales. The HUMMER brand has been rumored to be on the auction block as GM seeks to improve both it's environmentally-friendly image and evict a loss-making brand from its portfolio.

Despite poor domestic sales, GM said it believes it can sell the ailing brand for US$2 billion.

A large portion of the borrowed funds will go toward acclerated development of more fuel-efficient powertrains. In a separate announcement, GM said that it would halt all further development of its V-8 engines and redouble their efforts in smaller displacement fours and sixes.

(Editor's note: More news will come as details of GM's product strategy emerge. Stay tuned.)

The bottom line: GM will survive. It will be fundamentally changed, but it will endure.

Taken in total, this is the start of a painful, yet absolutely necessary step in the evolution of General Motors as a company. For too long, Wagoner and his forebears doubled down on the SUV market and failed to anticipate the day when gasoline demand would outstrip production capacity.

Since the start of 2008, General Motors has seen a steady decline in US sales. Trucks and SUV sales have been hardest hit by the combination of higher gas prices and a weakening dollar, with sales down 22 percent year to date. Car sales slid 8.6 percent from a year ago.

Share prices have mirrored the dismal sales reports: from a year-to-date high of US$28.98 on January 30, shares closed today at US$9.84, up 46 cents on today's news.

[Link] - AN (subscription req'd)

New Zealand firm announces hybrid retrofit kit

As gas prices continue to soar, the waiting lists for nearly every hybrid on the market have grown ever longer. Many would-be buyers are coming from SUVs and light trucks, both of which are being hammered on resale value as new inventory stalls on dealer lots.

Now there's an alternative.

Octafuel - a manufacturer of hydrogen fuel cells - has developed a regenerative braking system that can be retrofitted to nearly any vehicle.

“Regenerative braking is about recovering energy when drivers put their foot on the brake – which reduces fuel costs,”said Fresnel in a release announcing the new systems.

Using standardized battery packs and electric motors, each application is customized to fit the specific vehicle and work with the car's original gasoline or diesel drivetrain.

“The technology is well-proven, having been fitted to more than a million motor cars worldwide over a variety of operating conditions, and now OctaFuel has taken the essence of that technology and made it affordable for everyday people," said Fresnel.

Fresnel is mum about the wattage or storage capacity, but notes that the Octafuel retrofit will pay itself back much faster than an all-new hybrid car.

Prices range between NZ$1,247 for the entry level system suited for commuter cars to NZ$5947 for the commercial grade system better suited to large cars and light trucks.

[Link]

Smart forTwo to receive gas saving upgrade this fall

Already renowned for being stingy with gas, the nimble Smart forTwo will become more efficient with the introduction of auto-stop engine management beginning in October.

Despite being marketed by Smart as a "micro hybrid", the name is misleading.

The forTwo will not carry any batteries nor an electric motor as found in the Toyota Prius or Camry hybrid; there simply isn't room for either.

Instead, the auto-stop feature will save fuel by shutting down the forTwo's engine and shift to neutral as the car coasts to a stop. The engine will shut down when the car slows below five miles per hour and the brakes are applied. The engine will restart immediately when the brakes are released.

City fuel economy will rise by eight percent, to 36 miles per gallon in the US EPA drive cycle. Carbon dioxide emissions will be reduced to 103 grams per kilometer, according to preliminary tests by Smart.

The auto-stop upgrade will also come standard on the diesel-powered CDI Smart range when production restarts next year. However, the diesel models will not be coming to US shores.

[ Link ]

Market Wrapup: Oil rallies to record $147/ barrel; gasoline prices hold steady

Oil surged to a record high in trading before settling to $145.08 at the closing bell, up $3.43 for the day.

A weakening dollar and concerns about a production strike in Brazil contributed to the higher price, the Associated Press reported.

Meanwhile, the national average for regular unleaded gasoline dropped to $4.09 per gallon from Monday's high of $4.10, according to the AAA Daily Fuel Gauge Report.

Midgrade and premium unleaded both rose 5 cents from a month ago to $4.35 and $4.50 respectively.

E85 fell 4 cents from a month ago, to $3.29 per gallon. When adjusted for the fuel's lower energy content, E85 is currently priced at $4.33 per gallon.

The nation's highest pump prices in the country passed $5 this week. In Kailua Kona, Hawaii, drivers are paying $5.08 a gallon. Williamston, N.C., has the lowest gasoline prices in the nation at $3.65 a gallon, according to www.GasPriceWatch.com. The Web site relies on volunteers to report gasoline prices nationwide.

US Senate: EPA to delay action on CO2 emissions

Despite last year's Supreme Court ruling mandating that the agency must review the impact of carbon dioxide emissions, EPA administrator Stephen Johnson will announce today that action will be deferred until the Bush administration leaves office.

"After more than seven years, this Administration is still not willing to make the hard choices to confront global warming," Sen. Tom Carper (D-DE), chairman of the Senate Subcommittee on Clean Air and Nuclear Safety, said in a release.

EPA spokesman Tim Lyons said the EPA's proposed rule-making that will be revealed later in the day is not a delay because acting on climate change "takes a lot of time, thought and analysis," without going into more details.

The delay in action is a victory for automakers beset by rising material costs and softening demand. This decision will give them time to prepare for production changes that may require significant capital investment.

What is now clear is that — after years of equivocation — the Bush administration has succeeded in passing the buck on tackling climate change.

[ Link - Subscription Req'd ]

News Brief: Nissan bumps MSRP on 08 Sentra, 09 Murano

If you're considering a new Sentra or Murano, you'll need to fork over more cash for it, starting today.

In response to rising material and shipping costs, Nissan Motor Corporation announced that the 2008 Sentra's MSRP will increase by $100. The base MSRP for the 2009 Murano will increase by $540.

[Link]

Toyota to idle truck, SUV plants, begin US assembly of Prius

Responding to the decline in sales that prompted GM's shift from light trucks, Toyota will idle its Tundra and Sequoia production line in San Antonio, Texas for three months starting August 8.

While sales of the Sequoia SUV rose marginally, sales of the recently redesigned Tundra fell by 54 percent last month, signalling a reaction by consumer to sustained high oil prices and dragging Toyota's overall monthly sales down by 21 percent for the month.

Production of the Sequoia full-size SUV will also be idled at Toyota's plant in Princeton, Indiana. Production of the Sienna minivan will continue at Princeton during the transition, spokesman Mike Goss said.

During the shutdown, the Princeton plant will switch to the smaller and more fuel efficient Highlander SUV, which originally slated to be built at the Blue Springs, Mississipppi plant currently under construction.

Instead, the Mississipppi plant will begin production of the Prius hybrid in late 2010. This will be the first factory outside of Japan to produce the iconic hybrid.

The increase in production comes in response to a sustained increase in demand brought about by $4-per-gallon gasoline in the United States.

As reported by the Associated Press, sales of the Prius fell 34 percent last month as Toyota failed to meet demand for the 46 miles per gallon car. Priuses are sitting on the lot for just four or five days before they're sold, according to Tom Libby, senior director of industry analysis for the Power Information Network, a branch of J.D. Power and Associates.

By contrast, the Toyota Tundra pickup is on the lot for an average 64 days before it is sold.

Toyota has 13 North American plants and two under construction in Mississippi and Ontario. The automaker has more than 43,000 workers in North America.

Toyota's U.S. shares rose $1.12, or 1.2 percent, to $92.60 in New York trading today, following the announcement.

[Link]

GM hybrid fleet rolls out in oil-rich Dubai

In a deal with General Motors, the Dubai Roads & Transport Authority has begun a year-long field test of five Chevrolet Malibu and five Chevrolet Tahoe hybrids.

Despite being flush with oil reserves, the agency has expressed interest in cutting their operating costs and pursuing more ecologically conscious means of transport. GM was the first manufacturer to respond to a global invitation issued by Sheikh Mohammed bin Rashid Al Maktoum, then ruler of Dubai.

Maktoum currently serves as vice president and prime minister of the United Arab Emirates.

The primary goal of the test fleet is to see how the hybrid drivetrains — and the batteries in particular — respond to the extreme climate in the Middle East. Information gathered from the test fleet will help GM engineers determine a "real-time expectation for the batteries" lifespan in such extreme heat.

Emissions and fuel economy will also be monitored.

The Dubai RTA currently operates 6,000 vehicles and has announced that it will replace its entire fleet with more fuel-efficient models, pending the outcome of this and other trial programs.

[Link]

News Brief: Hyundai to sell LPG hybrid Elantra in 2009

Beginning next June, Hyundai will leapfrog Toyota and Honda in the next-generation battery race with their first LPG hybrid, the Elantra LPI.

Based on the Elantra wagon available in Europe and Asia, the Elantra LPI will feature a liquid petroleum gas version of their 1.6 liter Gamma inline-4 paired with a 15kW electric motor bolstered by lithium polymer batteries.

Sales of the LPI be restricted to the Korean market at first; distribution is expected to include to Asia and Europe in early 2010.

[Link]

Road Test: Chevrolet Fuel Cell Equinox

In an age of soaring gas prices, economy and ecology have ousted horsepower and torque as the buzzwords in today's automotive market. From ethanol-intensive blends of gasoline to soy-based plastics used to furnish interiors, environmentalism has become both a means to combat rising material costs and a powerful pitch line to sell cars.

In this market, Honda and Toyota have long been the front runners, raking in a tidy profit with the fuel sipping Civc Hybrid and Toyota Prius, both of which squeeze 40 or more miles out of a gallon of gas.

But while the Japanese spent the last decade focused on maximizing fuel efficiency through investment in gasoline-electric hybrids, General Motors doubled down on the SUV market. GM made millions in an era of cheap gas by selling tarted-up trucks which on average weighed nearly two tons and returned single-digit gas mileage.

With the SUV market now nearly obliterated by oil trading at $130 per barrel, General Motors has regrouped, aggressively publicizing their own fuel efficient and ecologically conscious products.

The figurehead in this new campaign is the fuel cell powered Chevrolet Equinox.

Dave Barthmuss, GM regional group manager of environment & energy communications, sees the hydrogen powered trucklet as an example of how to move away from oil altogether. "As a nation we are 98 percent dependent on oil as an energy source. It is a finite resource. Hydrogen fuel cell technology is an option that we feel is part of the future."

Road Test:
A small SUV comparable in size to the Honda CRV, the fuel cell Equinox drops the current model's six-cylinder engine in favor of an electric motor and an automatic transmission that continually selects the best gear ratio for either acceleration or economy.

But rather than use batteries to store electricity, the fuel cell Equinox uses pressurized hydrogen and atmospheric oxygen in the on-board fuel cell to create power for the motor as it is needed. To extend the vehicles range, a small battery pack is also carried on board to store energy captured from the vehicle's regenerative braking system.

Electric motors produce maximum torque at idle; the first sensation when driving the diminutive SUV is one of instant power and eager acceleration. During my time cutting a swath through typical Valley traffic, the Equinox responded to a squeeze of the "gas" pedal with zeal, making merging and overtaking effortless.

At first, the regenerative braking was sensitive, requiring a deft touch to brake smoothly. Regenerative braking works by using the electric motor as a generator, creating electrical currents that charge the batteries and slow the car by creating resistance within the motor itself. And as the motor slows, so does the rest of the car.

After a few blocks of stop-and-go driving the learning curve leveled off. It was actually fun to anticipate the next red light and try to save the most energy, watching the power meter (which replaced the gas-powered model's tachometer) spin backwards as the regenerative braking kicked in. In a panic stop triggered by an trailer-towing twit, the regular hydraulic brakes stopped the SUV with alacrity.

In nearly every respect, the fuel cell Equinox proved to be a very refined vehicle that is as practical as its gasoline-powered counterpart. At highway speed, the only sound was a faint whine from the electric motor and the wind rustling past the windows. The rear hatch wasn't cluttered by batteries or hydrogen tanks befitting a zeppelin. The rear seats still folded, just as on the regular model. You could very easily take this trucklet on the supermarket run or wherever else the urban SUV still roams.

Which is precisely the point GM is trying to prove.

Project Driveway
The Chevrolet division of General Motors will be offering 100 examples to selected members of the public as a part of Project Driveway, their first long term public road test of fuel cell technology.

Participants will be chosen based on their driving habits and their proximity to one of three hydrogen refueling stations operated by GM in Los Angeles County. Those selected to drive the Equinox will get to use it completely free of charge for three months at a time and report their experiences back to Chevrolet. Motorists in Washington D.C. and New York City will also participate in the program.

"Drivers will provide regular, candid feedback about their use of the vehicle in their daily lives, the vehicle's performance and their personal preferences," said Ed Peper, general manager of the Chevrolet division, in a public announcement introducing the program. "[Their feedback] is key in defining our product and introduction plans for fuel cell vehicles."

Yet before the program begins, driving range will be the critical issue. When fully fueled with nine pounds of hydrogen, the fuel cell Equinox can be driven about 150 miles. This is fine for the inter-city commute and in traditional gasoline mileage figures, this equals roughly 35 miles per gallon — a remarkable feat given the size of the vehicle.

The lack of hydrogen fueling stations remains the major roadblock toward delivering an otherwise road ready product.

Barthmuss recognizes this hurdle and sees "Project Driveway" as a way to stimulate investment in fueling stations. "Our goal is to have a fuel cell program ready by 2010 and we are confident that we can meet that goal. We don't see any engineering standpoint. The only roadblock is infrastructure."

Note: A version of this article was published in the Daily Sundial on June 30, 2008. Reprinted with permission. - DM.

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